be completed by the employee and handed back to their employer. If the employee doesn’t complete the P46 the employer is, to the best of their ability, required to complete the form on the employee’s behalf and was previously required to deduct tax at the basic rate (BR). From 6 April 2011 the employer will be required to deduct tax using the 0T (zero T) code on a non-cumulative basis. Tax code 0T will ensure that tax is deducted at the basic, higher and additional rates where necessary. When an employee receives income from an occupational pension whilst still in the same employment It is becoming more common for individuals to receive occupational pension payments whilst continuing in employment with their existing employer. Previously the employer was required to operate the employee’s tax code on both the employment income and pension payments giving rise to the employee receiving duplicate personal allowances, which may result in the underpayment of tax at the year end. From 6 April 2011, the employer will be required to operate the 0T code on a non-cumulative basis against the pension payments to prevent duplication of personal allowances. When an employee receives payments from their employer after leaving Previously, if an employee receives payment from their employer after the employment has ceased and the payment had not been included on the individual’s P45, the employer was required to deduct tax at BR. From 6 April 2011, the employer will be required to deduct tax using the 0T code on a non-cumulative basis with the exception of employment related shares (see below). Tax code 0T will ensure that tax is deducted at the basic, higher and additional rates where necessary. This reduces the possibility of an underpayment of tax at the year end. In certain limited circumstances this may result in an employee paying too much tax. Information on what to do if an employee thinks they have overpaid can be found in Claiming Payments in connection with employment related securities including cash payments arising from those securities that are made to an employee after leaving will continue to be taxed at BR. New 50 per cent rate tax code The additional 50 per cent rate of Income Tax came into effect on 6 April 2010. From 6 April 2011, a new 50 per cent flat rate tax code will be issued to employers for all relevant employees. This tax code, denoted as code D1, is operated where the employee’s pay has reached the additional rate band (£150,000 for the year 2011-12) in one employment and therefore all income in a second employment will be taxed at 50 per cent. The introduction of the 50 per cent rate will also affect the amount of tax payable under a PAYE Settlement Agreement (PSA), if any of the employees included in it are liable at the additional rate. a tax refund when you stop work Employment related securities
Summary of Budget 2012
Chartered Institute of Payroll Professionals’ Budget 2012 Summary Introduction After all the various leaks and rumours that have abounded over the last week, there was little in today’s Budget that came as a surprise.
CIPP Policy News Journal
09/10/2012, Page 102 of 234
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